The idea is very simple: majority stocks in a 100 basket should trade above their 200 day average price to carry a strong trend. As a conservative investor if 65% of them dips below their 200MA you should be sidelined, until the majority gains strength again. If you are looking to take moderate risk you can use the 50 line, additionally you may switch to weekly timeframe to catch moves sooner, minding the risks that those can be fake moves and reverted before the end of the month with more likelihood than the monthly. For aggressive entries/exits one may use the 25 line. For entries out of the three supplementary indicators at least two of them should be in the positive in addition to the above.
評論
SubZero
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@Algyros I think there is not much to add on how to use the indicator or what it is. The idea is not too complex and works relatively well for what it is. I thought I bring attention to this as it was posted a few years ago and some might find it "new. I am a big fan of volume based indicators so I might experiment with replacing one of the supplementary ones to either OBV or EOM.
I may be able to add value by reflecting on recent events and what is my current read here. The 50 line proved to be a good exit signaled in 2015 June/July after clear divergence between the upward price action and strength declining on this graph. The indicator also suggest that extreme caution should be exercised the pattern very much resembles the 2007 January - 2008 September window. Having said that I do not think all should reach to the panic button as 2010 and 2011 also showed similar patterns and while it was painful it did not end up in a full blown recession, probably because the big drivers like policy makers learnt how to smooth out these sharp declines.
I do think that the overall macro indicators (trends and not the recent data published) are concerning, however I do not think they warrant a GFC. There is a lot of speculative play around oil pricing which is a key driver here combined with a lot of leading sovereign nation troubles. There is increased risk indicated by spreads and credit default swap basis points but its nowhere close to the risk we had with the unsecured house loans back then. I also think that the continuous bull run for the past few years was overextended and the correction is/was due. What Im unsure of is whether this level is consolidation before resuming uptrend or there is a further 20% drop before riskier assets can start to appreciate.
Whatever your risk level is I suggest taking small (2 to 30% depending and no leverage) long positions only at these levels or just stay in cash until there is more clarity, this is clearly a highly volatile window.
In any market one can do trades on the shorter time frame even intraday with higher risk, this graph is about longer term investments.
Algyros
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I'm curious: is there something that you wish to add to Algokid's earlier post, or to the Carlucci indicator in general?
I may be able to add value by reflecting on recent events and what is my current read here. The 50 line proved to be a good exit signaled in 2015 June/July after clear divergence between the upward price action and strength declining on this graph. The indicator also suggest that extreme caution should be exercised the pattern very much resembles the 2007 January - 2008 September window. Having said that I do not think all should reach to the panic button as 2010 and 2011 also showed similar patterns and while it was painful it did not end up in a full blown recession, probably because the big drivers like policy makers learnt how to smooth out these sharp declines.
I do think that the overall macro indicators (trends and not the recent data published) are concerning, however I do not think they warrant a GFC. There is a lot of speculative play around oil pricing which is a key driver here combined with a lot of leading sovereign nation troubles. There is increased risk indicated by spreads and credit default swap basis points but its nowhere close to the risk we had with the unsecured house loans back then. I also think that the continuous bull run for the past few years was overextended and the correction is/was due. What Im unsure of is whether this level is consolidation before resuming uptrend or there is a further 20% drop before riskier assets can start to appreciate.
Whatever your risk level is I suggest taking small (2 to 30% depending and no leverage) long positions only at these levels or just stay in cash until there is more clarity, this is clearly a highly volatile window.
In any market one can do trades on the shorter time frame even intraday with higher risk, this graph is about longer term investments.